Why do I need Uninsured/Underinsured Motorist Coverage?

The Importance of Uninsured/Underinsured Motorist Coverage to New Mexico Drivers

For New Mexico drivers, carrying liability insurance is a legal requirement under the New Mexico Uninsured Motorist Act. However, this mandate does not ensure that other drivers on the road are insured, and it certainly doesn’t guarantee that their insurance coverage is adequate. That is why purchasing uninsured motorist coverage as part of your auto insurance policy is invaluable. This article explains why New Mexico drivers should prioritize purchasing and carrying uninsured/underinsured motorist (UM/UIM) coverage on each of their household vehicles.

In New Mexico, Drivers are Statistically Likely to be in Serious Car Accidents Involving an Uninsured or Underinsured Motorist.

There are twenty-eight million uninsured drivers in the U.S. One in eight motorists (12.6%) do not have auto insurance. Uninsured driver rates by state range from 3% to 29% of all drivers. Although it is illegal to drive without insurance in New Mexico, a significant percentage of drivers on the road are still uninsured. As per the Insurance Research Council, New Mexico ranks among the states with the highest proportion of uninsured motorists. This scenario elevates the risk of getting into an accident with an uninsured driver, making uninsured motorist coverage an essential safeguard. The states with the five highest percentages of uninsured drivers include New Mexico, which has the fourth highest number of uninsured drivers, and are as follows:

Mississippi: 29.4%

Michigan: 25.5%

Tennessee: 23.7%

New Mexico: 21.8%

Washington: 21.7%

What this means is that every car accident in New Mexico carries approximately a 22% chance of involving a driver with no auto liability insurance. Further, most drivers carry minimal liability limits, making them underinsured even if they carry auto insurance.

Uninsured Motorist Coverage in New Mexico Automatically Includes Underinsured Motorist Coverage

Even if an at-fault driver carries liability insurance, most states, including New Mexico, only require drivers to carry minimal liability policy limits of $25,000, per person. That means that if you or a family member are in a car accident and suffer serious injuries, sustaining damages in the hundreds of thousands, the maximum you would be able to recover from another driver is a mere $25,000 – a small fraction of your actual damages. Every purchase of uninsured motorist coverage in New Mexico automatically comes with underinsured motorist coverage as well, which is triggered any time an at-fault driver carries insufficient liability insurance to cover all your damages. 

Understanding Uninsured/Underinsured Motorist Coverage and “Stacking”

Uninsured/underinsured motorist coverage protects you when you’re involved in an accident with an at-fault driver who does not have any insurance or lacks sufficient coverage to pay all your damages. It covers costs associated with bodily injuries to you and your passengers and property damage to your vehicle. Underinsured motorist coverage will pay at least the amount of uninsured/underinsured motorist insurance purchased for an injured person’s benefit, combined on each of his or her household vehicles if the purchaser opts to provide “stacking.” This is referred to as intra-policy stacking because the policy limit for each listed vehicle is combined within a single policy. For example, if you purchase an auto liability policy covering four vehicles with liability policy limits of $25,000 and you opt to also purchase “stacked” UM/UIM coverage, then you would have $100,000 in insurance available to compensate you if you are in a car accident with an uninsured or underinsured motorist. Because of the excellent value and importance of stacked UM/UIM coverage, it is critical never to reject stacking on your policy.

Further, uninsured/underinsured motorist insurance covers every one of your family members, whether by blood, marriage, or adoption, while they are “residing” in the same household as the insurance policyholder, regardless of whether they were operating or occupying a vehicle listed on the policy. That means, for example, that if a family member is in a car accident and lives in more than one household in which at least one of the residents carries uninsured/underinsured motorist insurance, that family member can add together or combine all the applicable policy limits. This is referred to as inter-policy stacking, which allows every insured to combine their own UM/UIM insurance with the UM/UIM insurance of each family member with whom they reside. 

For instance, the nineteen-year-old daughter of a divorced couple who formerly lived part of the time with each parent, and carries her own UM/UIM insurance on her vehicle while away at college, would be able to combine the insurance limits of all three policies. If her mom’s policy carried a total of $100,000 in UM/UIM, her dad’s policy carried a total of $100,000 in UM/UIM, and she had her own policy with $25,000 in UM/UIM on one vehicle, then she would have $225,000 in insurance available to compensate her if in a car accident with an uninsured or underinsured motorist. 

Families that carry uninsured/underinsured motorist coverage pay relatively inexpensive premiums compared to liability insurance premiums and recover the largest settlements, due to the ability to “stack,” or aggregate, the policy limits for each of their insured vehicles (intra-policy stacking) along with the policy limits of each of their family members with which they reside part of the time (inter-policy stacking). UM/UIM coverage is by far the most valuable insurance product when it comes to auto insurance.

Uninsured/Underinsured Motorist Policies Provide Broad Coverage

UM/UIM coverage provides a safety net against the potential financial consequences of an accident with an uninsured/underinsured driver. Medical bills, rehabilitation costs, lost wages due to time off work, and other associated expenses can pile up quickly following an accident. UM/UIM coverage can help you manage these costs without having to pay out of pocket. In addition, UM/UIM coverage will compensate you and your family members for general damages suffered because of an injury, including pain and suffering, lost enjoyment of life, and even punitive damages to compensate an injured party for damages relating to the reckless or egregious misconduct of the at-fault driver, such as drunk driving, texting, or fleeing the scene of an accident. Punitive damages are ordinarily not covered by the liability policy of the at-fault driver. UM/UIM coverage also comes with UM property damages coverage that will cover the damage to your vehicle and personal property and provide an additional policy limit to compensate you for punitive damages.

Peace of Mind

Carrying UM/UIM coverage gives you peace of mind. It allows you to hit the road with the knowledge that you’re protected, even in the unfortunate event of an accident with an uninsured driver. Given the risks posed by uninsured drivers on New Mexico’s roads, purchasing UM/UIM coverage should be a key consideration for motorists. It offers crucial financial protection and peace of mind, shielding drivers from the burden of unexpected expenses following an accident and permitting large recoveries of insurance benefits if seriously injured. While no one plans to be involved in a car accident, being prepared for this possibility can make a significant difference when it comes to managing the aftermath.

As with all insurance decisions, it’s advisable to consult with an experienced insurance professional who can help you understand your coverage options and select the policy that best fits your needs and budget. The attorneys at Prince, Schmidt, Baca & Woods, LLP are insurance coverage experts who specialize in uninsured/underinsured motorist claims and litigation. 

Related Posts